Point & Figure Charting reduces the importance of time on a chart and instead focuses on price movements. Point & Figure charts are made up of X's and O's, X's being new highs and O's being new lows. There are two inputs to a Point & Figure chart:
One of the main uses for Point & Figure charts, and the one emphasized in this section, is that Point & Figure charts make it easier for traders to see classic chart patterns. In the chart below of the E-mini S&P 500 Future, the Point & Figure chart emphasized support and resistance lines as well as areas of price breakouts:
Again, the Point & Figure chart makes it easy for traders to see the double bottom pattern below in the chart of the E-mini S&P 500 Futures contract:
The e-mini chart above illustrates the two bottoms of the double bottom pattern, as well as the confirmation line that is pierced, resulting in a potential buying opportunity.
Point & Figure is a very unique way to plot market action. The strongsuit of Point & Figure charting is that it eliminates the element of time and focuses on price.
Sourced from OnlineTradingConcepts.com All copyrights belong to their respective owners.